Agency.com
Write up #1 Due: Should the team submit the GE RFP? Why/not?
General Electric RFP is a double edged sword for AGENCY.com. This is a kind of opportunity that will provide them a spot in the elite league but if not executed correctly can also cause devastating failures. Evaluating benefits and risks, I am of the opinion that AGENCY.COM should not submit GE RFP. General Electric is a kind of win that would kill AGENCY.COM for what it stands. I rest my opinion based on following points –
1. Industry Landscape: Web Design in 1995 was in its infancy with great potential for growth. Considering industry using Porters model, competition within industry is low because of the requirement for specialized skill set; there was low possibility for new entrants since it requires a steep learning curve; risk of substitution is low since web design came in as a disruptor technology; buying power of the customer is less since he/she does not have enough suppliers and cannot vertically integrate; supplier power is high due to low competition. It has provided AGENCY.COM strategic advantage in expanding market place.
2. Control: GE contract was worth $4 millions. All previous jobs performed by them were budgeted around 100 thousand dollars. GE would become almost 100 % of their revenue making AGENCY.COM their prisoners. GE would have exerted tremendous influence on their day to day business and made AGENCY.COM perform tricks before they would have been ready for it.
3. Cash Flow Management: AGENCY.COM exhibited positive cash flow by enforcing 50% payments from customers in advance. GE standard payment terms are anywhere from net30 to net90. AGENCY.COM will have to borrow money from financial institutes to support activities for GE account. It could lead to wrong precedence with other customers who might demand big price discount for advance payment knowing GE terms.
4. Company Culture and Structure: AGENCY.COM represented team of pioneers with Can-do attitude ready to
General Electric RFP is a double edged sword for AGENCY.com. This is a kind of opportunity that will provide them a spot in the elite league but if not executed correctly can also cause devastating failures. Evaluating benefits and risks, I am of the opinion that AGENCY.COM should not submit GE RFP. General Electric is a kind of win that would kill AGENCY.COM for what it stands. I rest my opinion based on following points –
1. Industry Landscape: Web Design in 1995 was in its infancy with great potential for growth. Considering industry using Porters model, competition within industry is low because of the requirement for specialized skill set; there was low possibility for new entrants since it requires a steep learning curve; risk of substitution is low since web design came in as a disruptor technology; buying power of the customer is less since he/she does not have enough suppliers and cannot vertically integrate; supplier power is high due to low competition. It has provided AGENCY.COM strategic advantage in expanding market place.
2. Control: GE contract was worth $4 millions. All previous jobs performed by them were budgeted around 100 thousand dollars. GE would become almost 100 % of their revenue making AGENCY.COM their prisoners. GE would have exerted tremendous influence on their day to day business and made AGENCY.COM perform tricks before they would have been ready for it.
3. Cash Flow Management: AGENCY.COM exhibited positive cash flow by enforcing 50% payments from customers in advance. GE standard payment terms are anywhere from net30 to net90. AGENCY.COM will have to borrow money from financial institutes to support activities for GE account. It could lead to wrong precedence with other customers who might demand big price discount for advance payment knowing GE terms.
4. Company Culture and Structure: AGENCY.COM represented team of pioneers with Can-do attitude ready to